Namibia Well May Revive Skeleton Coast Drilling After Misses

May 3 (Bloomberg) -- HRT Participacoes em Petroleo SA is
expecting results this week from a well off Namibia’s Skeleton
Coast that may revive interest in oil exploration after two
failures last year in the southwest African nation.

The Wingat-1 well, in an area where shipwrecks line the
coast, is expected to be finished at a depth of about 4,200
meters (13,800 feet) by the end of this week, HRT Chief
Executive Officer Marcio Mello said in an e-mail. The well is
being drilled by Transocean Ltd.’s semi-submersible Transocean
Marianas rig.

BP Plc, Chariot Oil & Gas Ltd. and Repsol SA all have
stakes in offshore blocks in Namibia, where 18 wells in past
decades have failed to find commercial crude deposits. The
explorers are betting west Africa’s coastal shelf may mirror
Brazil across the Atlantic, and that Namibia will yield major
finds like neighboring Angola.

“A successful oil well in Namibia would be very positive
for all companies involved in Namibia as there is considerable
skepticism over the oil potential,” Anish Kapadia, a senior
research analyst for Tudor, Pickering, Holt & Co. International,
said by e-mail. “Most believe it is gassy.”

Investors have punished Chariot, which drilled two dry
holes in Namibia, sending its shares down almost 90 percent in
the past year. Rio de Janeiro-based HRT is the cheapest energy
stock in the Americas after it found natural gas rather than oil
in Brazil’s Amazon jungle. Investors are assigning no value to
the Namibia licenses, Mello said last month.

‘Not Critical’

Chariot declined 13 percent to 17.25 pence by 3:10 p.m. in
London, the biggest intraday drop in a month and increasing its
loss this year to 37 percent. HRT dropped 4.5 percent to 4 reais
in Sao Paulo. It has fallen 60 percent over the past year.

HRT gives the Wingat well a 27.5 percent chance of success
and is considering a fourth well, Mello said. Galp Energia SGPS
SA is its partner for its first three wells.

“It will be very important, but not a critical issue”
that HRT finds oil with this well, Mello said in the e-mail.
“Most important is to evaluate the basin with our exploration
campaign of three wells at the moment.”

Companies are expected to drill nine wells in Namibia from
2012 to 2014, equal to the rate seen from 1994 to 1998, said
Immanuel Mulunga, Namibia’s petroleum commissioner at the
Ministry of Mines and Energy. At that time, explorers withdrew
from the country after oil prices dropped.

In 2010, more than half of the 57 licenses were still
available; now there are none, drawing interest in partnerships
from companies not yet involved, Gil Holzman, CEO of Toronto-based Eco Atlantic Oil & Gas Inc., said April 29.

‘Overcooked’ Gas

“The door will be shut when HRT makes that all important
discovery,” Mulunga said in a speech last month at an energy
conference in the capital, Windhoek. The government plans to
collect more data with an emphasis on Namibia’s deepwater
blocks, he said.

Geologists at the conference highlighted seismic charts
from offshore blocks, making comparisons to major finds on the
coastlines of Brazil, where billions of barrels of oil have been
found in the last decade, and to Angola, Africa’s second-largest
oil producer.

Natural gas discovered in the Kudu Field off Namibia’s
southern coast was once potential oil that became “overcooked”
deep beneath the earth, according to a 2011 report by Chariot
Oil, which holds acreage north of the area.

Stranded Sailors

HRT is the operator in 10 of the 12 blocks it holds in
Namibia, covering almost 69,000 square kilometers (26,600 square
miles) and holding 6.9 billion barrels in prospective resources,
according to the company website, citing a third-party
assessment.

Chariot and Eco Atlantic have interests in blocks
neighboring the prospects being drilled by HRT. About half of
Chariot’s 60,000 square kilometers of acreage is in Namibia.

The Skeleton Coast, a barren stretch of land south of the
border with Angola, became notorious among European navigators
after ships wrecked on its rocks or ran aground in fog. The name
is said to come from the bones left behind from whale and seal
hunts, and from the stranded sailors who perished there.

Chariot Oil, HRT, Eco Atlantic, Petroleo Brasileiro SA,
Repsol and Signet Petroleum Ltd. have local offices while others
are in the process of setting up, Mulunga said. Namibia is still
considered a frontier area, unlike Mozambique where major
natural gas deposits have been found.

“The activity level hasn’t been Mozambiquesque because
there hasn’t been a rig that’s come in for several operators;
it’s been a bespoke rig that’s come in for a particular
project,” Larry Bottomley, CEO of Chariot Oil, said in an April
23 interview. “The thing that would transform that would be
success.”